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Wine Spectator’s “Year In Wine: 2012” Reveals Continued Growth For U.S. Wine Market

As Wine Spectator reports in its latest issue, the wine industry pushed forward by many measures in 2012. In the United States alone, consumers bought an estimated 325 million cases of wine last year, according to Impact Databank. That’s 2% growth over 2011, positioning the U.S. to surpass France as the world’s biggest wine market.

American consumers also traded up, with sales of wines priced at $9 and higher growing by more than 11%, while sales of wines for less than $9 declined slightly, according to Nielsen data for retail sales. “I’ve finally been able to take fruit I originally contracted for our vineyard designates but was putting in our lower-priced AVA wines during the recession, and put it where it belongs—our more expensive single-vineyard wines,” says Tim Perr, owner of Santa Barbara’s Pali Wine Co.

Many believe the long-term forecast looks bright. “The future offers immense opportunities for growth as we continue to witness a major shift in attitude toward wine, particularly among younger drinkers,” says Joe Gallo, president of E&J Gallo Winery. “More than 15,000 U.S. citizens per day are reaching the legal drinking age.”

And yet, many in the industry, from retailers to restaurateurs to winemakers, could be forgiven for feeling like they were on the local train, constantly starting and stopping. That 2% growth is less than 2011, when sales grew by 3.5%. Champagne sales, often an indicator of the economic mood, were flat in America and slumped in the European Union.

And though they know customers have little extra cash, wineries are facing pressure to raise prices. The recession slowed sales and left wineries with an excess of wine in their cellars in 2008. But increasing sales have drained that excess. Shrinking vineyard acreage and three years of small global harvests have now created the opposite problem—wine volumes around the world are at their lowest point in 37 years, according to the International Organization of Vine and Wine (OIV). The demand for more wine is making grapes more expensive.

Overall, the mood reflects that of the global economy—one step forward, half a step back. “Welcome to the new normal,” says Rob McMillan, founder of Silicon Valley Bank’s wine division and an industry analyst. “We have to redefine our expectations of what normal is.”

For Wine Spectator’s full report on The Year In Wine: 2012, check out the magazine’s January 31-February 28 issue.